PPP May Be Closed, But Overfunding Haunts Borrowers

Even if a loan has been approved, paid out, and forgiven, the SBA says it is still subject to an overfunding review and may be retracted.

The Paycheck Protection Program (PPP) ended on May 31st, but borrowers should not be too quick to put the program in the rearview mirror. Despite its popularity, the program may soon come back to haunt even the earliest of recipients as loans are re-reviewed for “overfunding.”

PPP “overfunding” occurs anywhere a good faith error results in a borrower receiving more than he or she is qualified to have forgiven. Such errors could be due to anything from a typo in an excel sheet to a misunderstanding of the qualified expenses. If that happens, the difference must be paid back, unless it’s under $10. Yet, calling it a “good faith error” or “a typo” doesn’t quite capture the magnitude of an error that might mean a small business owes $10,000 on what was understood to be a forgivable loan in a crisis.

To read the rest, see my op-ed in the Baltimore Sun here.